02-1571, -1603
ERICSSON, INC. and TELEFONAKTIEBOLAGET LM ERICSSON,
Plaintiffs/Counterclaim
Defendants-Appellants,
and
ERICSSON COMPONENTS AB,
Counterclaim Defendant,
v.
HARRIS CORPORATION
Cross Appellant,
and
INTERSIL CORPORATION,
Defendant/Counterclaimant-
Cross Appellant,
and
HARRIS CANADA, INC.,
Counterclaimant.
Douglas A. Cawley, McKool
Smith, P.C., of Dallas Texas, argued for plaintiffs/counterclaim
defendants-appellants. With him on the
brief were Theodore Stevenson, III and Rosemary T. Snider. Of counsel on the brief were Donald L.
Jackson and John R. Lastova, Nixon & Vanderhye P.C., of
Arlington, Virginia.
Henry C. Bunsow, Howrey Simon
Arnold & White, LLP, of San Francisco, California, argued for
defendants/counterclaimants-cross appellants.
With him on the brief were Robert C. Laurenson; and Matthew E.
Hocker, Ethan B. Andelman, and Justin A. White, Howrey Simon
Arnold & White, LLP of Menlo Park, California. Of counsel were Lloyd A. Farnham and Stuart
L. Gasner, Keker & Van Nest, L.L.P, of San Francisco, California; and Celine
T. Callahan, Howrey Simon Arnold & White, LLP, of Washington, DC.
Steven R. Schooley,
Holland and Knight LLP, of Orlando, Florida, for
defendant/counterclaimant-cross appellant Intersil Corporation.
Appealed
from: United States District
Court for the Eastern District of Texas
Senior
Judge Paul Brown
02-1571, -1603
ERICSSON, INC. and TELEFONAKTIEBOLAGET LM ERICSSON,
Plaintiffs/Counterclaim
Defendants-
Appellants,
and
ERICSSON COMPONENTS AB,
Counterclaim
Defendant,
v.
HARRIS CORPORATION,
Defendant/Counterclaimant-
Cross Appellant,
and
INTERSIL CORPORATION,
Defendant/Counterclaimant-
Cross Appellant,
and
HARRIS CANADA, INC.,
Counterclaimant.
__________________________
DECIDED: December 9, 2003
__________________________
Before
MAYER, Chief Judge, NEWMAN and LOURIE, Circuit Judges.
Opinion for the court filed by Circuit Judge
LOURIE. Opinion concurring in part and
dissenting in part filed by Circuit Judge NEWMAN.
LOURIE, Circuit Judge.
Ericsson,
Inc. and Telefonaktiebolaget LM Ericsson (collectively, “Ericsson”) appeal from
the decision of the United States District Court for the Eastern District of
Texas granting judgment as a matter of law (“JMOL”) that Harris Corporation and
Intersil Corporation (collectively, “Harris”) do not infringe Ericsson’s U.S.
Patent 4,961,222. Ericsson, Inc. v.
Harris Corp., No. 4:98cv325 (E.D. Tex. July 11, 2002) (“JMOL Order”). Harris conditionally cross-appeals from the
district court’s denial of its motion for JMOL relating to damages. Ericsson, Inc. v. Harris Corp., No.
4:98cv325 (E.D. Tex. July 30, 2002) (“Final Judgment”). For the reasons stated below, we reverse the
grant of JMOL of noninfringement and affirm the denial of JMOL relating to
damages.
DISCUSSION
We review a district court’s
grant or denial of a motion for JMOL in a patent case de novo,
reapplying the JMOL standard used by the district court. Sextant Avionique, S.A. v. Analog Devices,
Inc., 172 F.3d 817, 824 (Fed. Cir. 1999).
JMOL is appropriate when “a party has been
fully heard on an issue and there is no legally sufficient evidentiary basis
for a reasonable jury to find for that party on that issue.” Fed. R. Civ. P. 50(a)(1). When reviewing a district court’s denial of
JMOL, we must “determine whether ‘viewing the evidence in the light most
favorable to the non-moving party,’ and giving the non-movant ‘the benefit of
all reasonable inferences,’ there is sufficient evidence of record to support a
jury verdict in favor of the non-movant.”
Southwest Software, Inc. v. Harlequin Inc., 226 F.3d 1280, 1289
(Fed. Cir. 2000) (citation omitted).
A determination of infringement
requires a two-step analysis. “First,
the court determines the scope and meaning of the patent claims
asserted . . . [and second,] the properly construed claims
are compared to the allegedly infringing device.” Cybor Corp. v. FAS Techs., Inc., 138
F.3d 1448, 1454 (Fed. Cir. 1998) (en banc) (citations omitted). Step one, claim construction, is an issue of
law, Markman v. Westview Instruments, Inc., 52 F.3d 967, 970-71 (Fed.
Cir. 1995) (en banc), aff’d, 517 U.S. 370 (1996), that we review de
novo, Cybor, 138 F.3d at 1456.
Step two, comparison of the claim to the accused device, requires a
determination that every claim limitation or its equivalent be found in the
accused device. Warner-Jenkinson Co.
v. Hilton Davis Chem. Co., 520 U.S. 17, 29 (1997). Those determinations are questions of
fact. Bai v. L&L Wings Inc.,
160 F.3d 1350, 1353 (Fed. Cir. 1998).
The
determination of the amount of actual damages is also a question of fact. Brooktree Corp. v. Advanced Micro Devices,
Inc., 977 F.2d 1555, 1578 (Fed. Cir. 1992).
When reviewing a district court’s denial of JMOL, we apply the
substantial evidence standard to the jury’s damages award. Micro Chem., Inc. v. Lextron, Inc.,
317 F.3d 1387, 1394 (Fed. Cir. 2003).
A. Infringement
On appeal, Ericsson argues that
the district court erred in granting Harris’s motion for JMOL of
noninfringement. Ericsson first contends
that the jury reasonably could have found that the “only supply power” limitation
was met literally (and that some other limitation was met equivalently) in
light of the substantial evidence that it presented to show that the speech
signal amplifiers in the accused devices do not supply power to the telephone
set when the receiver is in the on-hook position. Ericsson also asserts that the court erred in
holding that the “only supply power” limitation is entitled to no scope of
equivalence, arguing instead that it is a temporal or range limitation and is
not vitiated by a SLIC that is in standby mode 99.9% of the time. In addition, Ericsson maintains that it
offered substantial evidence of equivalence by showing that both caller-ID and
the “corrosion current” present only insubstantial differences from the claimed
invention. Finally, Ericsson argues that
the fact that the accused devices can optionally be used for caller-ID does not
negate infringement.
Harris responds that the district
court did not err in entering JMOL of noninfringement. Harris first argues that Ericsson failed to
provide substantial evidence that the accused devices literally satisfy the
“only supply power” limitation. Harris
also contends that the court correctly construed the “only supply power”
limitation to exclude the accused devices because a contrary finding would
vitiate that limitation. According to
Harris, the speech signal amplifiers in the accused devices always supply power
to the phone when it is on-hook, both through the QRA 23-25 transistors and
when engaging in on-hook transmission for caller-ID.
We
agree with Ericsson that the district court erred in granting Harris’s motion
for JMOL of noninfringement. As
discussed above, claim 1 of the ’222 patent requires that “the speech signal
amplifiers, which require power, only supply power to the telephone set
when the receiver is off its cradle and a call can be made.” ’222 patent, col. 4, ll. 34-37 (emphasis
added). Focusing on the word “only,” the
district court held that there could be no infringement under the doctrine of
equivalents because there was “uncontroverted evidence” that the speech signal
amplifiers in the accused devices supply “some power” to the telephone set in
the on-hook position. JMOL Order,
slip op. at 21-22. We agree that the
“only supply power” limitation would indeed be vitiated by an accused device
whose speech signal amplifiers always supply power to the telephone set
when the receiver is on-hook. See
Moore U.S.A., Inc. v. Standard Register Co., 229 F.3d 1091, 1106 (Fed.
Cir. 2000) (holding that a “minority” cannot be equivalent to a “majority,” its
very antithesis). However, for the
reasons set forth below, we disagree with the factual premise that the speech
signal amplifiers in the Harris devices necessarily behave in that manner. Instead, we conclude that substantial
evidence supports the jury’s finding that the accused devices infringe the ’222
patent under the doctrine of equivalents and that that finding does not vitiate
the “only supply power” limitation.[1]
To
begin with, Ericsson presented substantial evidence to show that the power
supplied by the QRA 23-25 transistors in the accused devices does not vitiate
the “only supply power” limitation. The
“only supply power” limitation refers only to power supplied by the speech
signal amplifiers. Although Harris
argued that the QRA 23-25 transistors in the accused devices are part of the
speech signal amplification circuitry, Ericsson argued that they are instead
part of the control circuitry, which merely switches the speech signal
amplifiers on and off. To support its
position, Ericsson presented the following evidence at trial: expert testimony
stating that the QRA 23-25 transistors are part of the control circuitry that
enables and disables the speech signal amplifiers,[2] a Harris
engineer’s notes labeling the disputed transistors as “shutoff transistors,”
and Harris data sheets describing the speech signal amplifiers as “disabled”
and “powered down” in the standby power state.
We conclude that that evidence was sufficient to support a reasonable
jury’s finding that any power supplied by the QRA 23-25 transistors in the
accused devices is not supplied by the speech signal amplifiers and therefore
does not vitiate the “only supply power” limitation.
Nor
does the fact that the accused devices could be used in conjunction with
on-hook functions such as caller-ID vitiate the “only supply power”
limitation. Ericsson points to evidence,
which Harris does not dispute, to show that the accused devices switch into
active mode when the phone is on-hook for just four seconds during the
caller-ID function. That brief change of
mode occurs only when a subscriber who has enabled the caller-ID function
receives a call, and according to Ericsson’s expert, amounts to less than 0.1%
of the time. Such a trivial difference
does not vitiate the “only supply power” limitation because, even under the
caller-ID scenario, the speech signal amplifiers in the accused devices are
very close to only supplying power to the telephone set when the receiver is in
the off-hook position. Thus, the jury
reasonably could have found that, even when used with caller-ID, the accused
devices are insubstantially different from the claimed invention and
consequently infringe under the doctrine of equivalents.[3]
Despite
the dissent’s contrary view, Festo is not a part of this case because
prosecution history estoppel, even if applicable, would not have precluded the
jury’s verdict of infringement under the doctrine of equivalents. The jury might still have found that claim 1
was infringed equivalently, even while finding that the amended limitations, of
concern to the dissent, were met literally.
Under the theory that we attribute to the jury, the QRA 23-25
transistors are not part of the speech signal amplifiers and the accused speech
signal amplifiers are thus literally “disabled” when the telephone receiver is
on-hook. The only equivalence issue thus
concerns when the speech signal amplifiers supply power, not whether
they are “enabled” or “disabled” as opposed to “actively connected” or
“effectively disconnected,” which was the subject of the amendment. In other words, the equivalence question
relates to whether “the speech signal amplifiers . . . only supply power to the
telephone set” when the receiver is off-hook.
That limitation was never amended and therefore cannot be subject to the
Festo presumption. The district
court even agreed that Festo was inapplicable when it granted JMOL of
noninfringement on the basis of the “all limitations rule,” and not prosecution
history estoppel, as the dissent states.
In fact, the district court never even mentioned the amendments to the
“enabled” and “disabled” limitations, but specifically noted that the disputed
limitation was not amended during prosecution.
JMOL Order, slip op. at 8.[4]
We
therefore conclude that the district court erred in determining that a finding
of infringement would vitiate the “only supply power” limitation. Moreover, we conclude that substantial
evidence supports the jury’s verdict of infringement under the doctrine of
equivalents. Accordingly, we reverse the
district court’s grant of JMOL of noninfringement.
B. Damages
Having
reversed the JMOL of noninfringement, we turn next to the issue of
damages. Harris conditionally
cross-appeals from the court’s denial of its motion for JMOL relating to the
amount of the damages award for lost profits due to lost sales and price
erosion. Harris does not, however,
contest the jury’s award of $136,000 as a reasonable royalty.
1. Jurisdiction
As
a preliminary matter, Ericsson challenges the propriety of Harris’s
cross-appeal. Citing Bailey v. Dart
Container Corp., 292 F.3d 1360 (Fed. Cir. 2002) (order), Ericsson argues
that Harris’s cross-appeal should be dismissed because Harris does not seek to
expand its rights under the district court’s judgment. Ericsson is mistaken. A cross-appeal is appropriate “when a party
seeks to enlarge its own rights under the judgment or to lessen the rights of
its adversary under the judgment.” Id.
at 1362. In other words, a party may
file a cross-appeal “when acceptance of the argument it wishes to advance would
result in a reversal or modification of the judgment rather than an
affirmance.” Id. That is precisely the situation before us:
Harris requests that we reverse the district court’s denial of its motion for
JMOL and reduce the amount of the damages award entered against it. Harris thus seeks to lessen Ericsson’s rights
under the district court’s judgment by reducing Ericsson’s monetary
recovery. Harris’s cross-appeal,
although conditional, is therefore properly before us.
2. Lost Profits Due to Lost Sales
On
the merits of the cross-appeal, Harris objects to the jury’s award of $3.5
million for lost profits due to lost sales.
First, Harris argues that Ericsson failed to provide “sound economic
proof” of its market definitions and market share estimates. Harris contends that Ericsson’s damages
expert, an accountant named Daniel Jackson, improperly based his definition of
the so-called “Harris market” on one witness’s testimony, rather than on market
research and recognized economic principles such as the cross-elasticity of
demand between the infringing product and available substitutes. With respect to the narrower “Ericsson
market,” Harris maintains that Mr. Jackson again failed to calculate the
cross-elasticities of demand, improperly assumed that switching costs were so
high as to prevent customers from purchasing SLICs that were not pin-compatible
with their existing line cards, and ignored that the SLIC industry is
characterized by “second-sourcing.”
Second, Harris argues that Jackson arbitrarily allocated Harris’s sales
between the “Harris market” and the “Ericsson market,” neglecting to consider
that many of Ericsson’s customers purchased from Harris as a “second source” to
Ericsson and that customers might redesign their line cards. Finally, Harris asserts that Ericsson failed
to establish the “but for” causation necessary to recover damages for lost
profits because Jackson’s analysis failed to take into account available
low-power standby SLICs that were noninfringing substitutes for those covered
by the ’222 patent.
Ericsson
responds that Jackson used an approved methodology for determining lost
profits, that set forth in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc.,
575 F.2d 1152 (6th Cir. 1978), and that his expert opinions were independently
supported by testimonial and documentary evidence. First, Ericsson argues that Jackson
appropriately segmented the market to reflect differing barriers to entry
depending on whether a customer had already designed-in a Harris SLIC or an
Ericsson SLIC. Ericsson defends
Jackson’s “Harris market” definition and his market share figures as supported
by the estimate of a Harris employee.
Similarly, Ericsson argues that Jackson’s “Ericsson market” definition
and his corresponding market share calculations were supported by actual sales
records and evidence relating to the costs associated with redesigning a line
card. Ericsson also maintains that a
lost profits analysis need not include cross-elasticity calculations. Second, Ericsson argues that it proved
causation of lost profits. Ericsson
adverts to internal Harris emails, customer testimony, Harris marketing materials,
and Harris’s sales of infringing products as evidence of customer demand for
the patented low-power standby feature.
Ericsson further argues that Jackson accounted for noninfringing
substitutes in his analysis of the “Harris market” but that noninfringing
substitutes were necessarily excluded from the “Ericsson market” because that
market segment consisted only of SLICs that were pin-compatible and
function-compatible replacements of the Ericsson SLIC.
We
agree with Ericsson that substantial evidence supports the jury’s damages award
for lost profits due to lost sales. To
recover lost profits, a patent owner must prove “a causal relation between the
infringement and its loss of profits.” BIC
Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d 1214, 1218 (Fed.
Cir. 1993). More specifically, the
patentee must show “a reasonable probability that ‘but for’ the infringing
activity, the patentee would have made the infringer’s sales.” Crystal Semiconductor Corp. v. Tritech
Microelecs. Int’l, Inc., 246 F.3d 1336, 1353 (Fed. Cir. 2001). To show “but for” causation, the patentee
must reconstruct the market to determine what profits the patentee would have
made had the market developed absent the infringing product. Grain Processing Corp. v. Am. Maize-Prods.
Co., 185 F.3d 1341, 1350 (Fed. Cir. 1999).
Such market reconstruction must be supported by “sound economic proof of
the nature of the market and likely outcomes with infringement factored out of
the economic picture.” Id.
We have affirmed lost profits
awards based on “a wide variety of reconstruction theories in which the
patentee has presented reliable economic evidence of ‘but for’ causation.” Crystal Semiconductor, 246 F.3d at
1355. We believe that Ericsson has done
just that. Ericsson presented its
damages theory at trial through Jackson’s expert testimony. Jackson reconstructed the “but for” market by
segmenting the market and determining Ericsson’s lost profits based on its
market share, a method that has met with this court’s approval on previous
occasions. See, e.g., id.
at 1354-56; State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573,
1577-80 (Fed. Cir. 1989). Specifically,
Jackson identified two markets: the “Harris market” and the “Ericsson
market.” Jackson defined the “Harris
market” as consisting of sales to customers that had not previously designed-in
an Ericsson SLIC. Jackson identified
Ericsson, AMD, and others as the competitors in that market and, based on
documents and the testimony of various witnesses, estimated that Ericsson would
have had a 40% market share in the “Harris market.” Jackson defined the narrower “Ericsson
market” as consisting of only those SLICs that were compatible with a
customer’s existing line card. Jackson
identified Ericsson and AMD as the only competitors in that market and, based
on actual sales records and the switching costs that a customer would incur to
redesign a line card, estimated that Ericsson would have had a 97% market share
in the “Ericsson market.” Jackson then
allocated Harris’s infringing sales in the reconstructed market as follows: 24%
to the “Harris market” and 76% to the “Ericsson market.” Finally, Jackson calculated Ericsson’s lost
profits due to Harris’s infringement to be $3.5 million.
Based on our careful review of
the record, we conclude that Ericsson’s market definitions and allocations were
supported by substantial and economically sound evidence. We also conclude that Ericsson’s market share
analysis adequately compensated for the effects that any noninfringing
substitutes would have had on Ericsson’s lost profits. See BIC Leisure Prods., 1 F.3d
at 1219 (stating that a patentee may rely on proof of market share in lieu of
proof of noninfringing substitutes in a lost profits analysis); State Indus.,
883 F.2d at 1577-78 (same). Moreover, we
point out that Ericsson’s failure to present all of the economic evidence that
Harris now identifies does not mean that Ericsson failed to present sound
economic evidence. Harris was entitled
to present its own damages theory regarding, for example, how cross-elasticity
calculations and second-sourcing would have affected the “but for” market. It was ultimately up to the jury, however, to
weigh the credibility of the parties’ opposing theories and evidence. See Micro Chem., 317 F.3d at
1394. We will not overturn a jury’s
determination as to the amount of a damages award when, as in this case, that
verdict was supported by substantial evidence.
3. Lost Profits Due to Price Erosion
Harris
also challenges the jury’s award of $645,000 for lost profits due to price
erosion, arguing that Ericsson failed to provide sound economic proof for those
damages. In particular, Harris contends
that Jackson improperly concluded that both the “Harris market” and the
“Ericsson market” were “totally inelastic” and that he failed to consider that
Ericsson would have lost sales in response to an elevated price. Harris also asserts that Jackson relied on a
flawed benchmark, the obsolete Ericsson 3762 SLIC, in his price erosion
calculation.
Ericsson
responds that an elasticity calculation is not required to recover for price
erosion when the patent owner instead establishes barriers to entry. Ericsson points out that it presented
evidence of two barriers to entry: the ’222 patent and the costs associated
with redesigning a line card, the latter of which prevented customers from
switching to other manufacturers’ SLICs that were not pin-compatible. In any event, Ericsson argues, any issues
with elasticity were presumably resolved by the jury when it awarded Ericsson
$645,000 in damages for price erosion instead of the requested $8.1
million. Finally, Ericsson maintains
that the Ericsson 3762 SLIC was an ideal benchmark for the price erosion
calculation because it experienced the same market conditions as the Ericsson
3764 SLIC, except that there was no Harris clone of the 3762 SLIC.
We
agree with Ericsson that substantial evidence supports the jury’s damages award
for lost profits attributable to price erosion.
To recover lost profits on a theory of price erosion, a patentee must
show that “but for” infringement, it would have sold its product at a higher
price. See BIC Leisure Prods.,
1 F.3d at 1220. The patentee must also
“present evidence of the (presumably reduced) amount of product the patentee
would have sold at the higher price.” Crystal
Semiconductor, 246 F.3d at 1357.
Moreover, “the patentee’s price erosion theory must account for the
nature, or definition, of the market, similarities between any benchmark market
and the market in which price erosion is alleged, and the effect of the
hypothetically increased price on the likely number of sales at that price in
the market.” Id.
To make out its theory of price erosion, Ericsson again relied on the expert testimony of Jackson, who used a “benchmark methodology” to assess price erosion. Jackson compared the performance of the patented product, the Ericsson 3764 SLIC, in the market affected by infringement with that of a similar product, the Ericsson 3762 SLIC, in a market free of infringement. He ultimately determined that Ericsson was entitled to $8.1 million in damages for price erosion.
Despite Harris’s contention, we cannot say that Ericsson’s
theory of an inelastic market precludes it from recovering price erosion
damages. In Crystal Semiconductor
Corp. v. Tritech Microelectronics International, Inc., 246 F.3d 1336 (Fed.
Cir. 2001), we stated that “a patentee must produce credible economic evidence
to show the decrease in sales, if any, that would have occurred at the
higher hypothetical price.” Id.
at 1359 (emphasis added). Ericsson
addressed that point at trial in its price erosion analysis, submitting that
the unique market conditions in this case would not have resulted in decreased
sales at an increased price. Namely,
Ericsson presented evidence of the high switching costs associated with
redesigning a line card, the relatively low costs of SLICs, and Jackson’s
expert opinion that those two conditions would produce an inelastic
market. Although we have recognized that
an inelastic market may be “rare,” id., it was for the jury to determine
whether this was such a case based on the evidence before it.
Moreover, Harris has not shown that the 3762 SLIC was an inappropriate benchmark for the 3764 SLIC. On the contrary, Ericsson offered substantial evidence of the similarities between the two products and their markets. For example, Jackson testified that the only technological difference between the 3764 SLIC and the 3762 SLIC — i.e., that the former is “constant current” and the latter is “resistive feed” — would not have affected the price of the products. He also explained that the 3762 SLIC was an ideal benchmark because both AMD and Harris were competitors in the 3764 SLIC market, whereas AMD was the only competitor in the 3762 SLIC market. Thus, according to Jackson, removing Harris’s infringing sales from the 3764 SLIC market would result in a market very similar to the one used as a benchmark.
The jury obviously did not accept Ericsson’s theory of price erosion damages in its entirety, as it awarded only $645,000 of the $8.1 million that Ericsson requested. To the extent that the jury did accept Ericsson’s theory of damages attributable to price erosion, however, we find that award to be supported by substantial evidence. Accordingly, we affirm the district court’s denial of Harris’s motion for JMOL relating to the amount of the damages award.
CONCLUSION
For the foregoing reasons, we reverse the district court’s grant of JMOL of noninfringement and affirm the court’s denial of JMOL relating to the amount of the jury’s damages award.
COSTS
Costs to appellants.
AFFIRMED-IN-PART and REVERSED-IN-PART
ERICSSON, INC. and TELEFONAKTIEBOLAGET LM ERICSSON,
Defendants-Appellants,
and
ERICSSON
COMPONENTS AB,
Counterclaim Defendant,
v.
Cross Appellant
and
INTERSIL
CORPORATION,
Defendant/Counterclaimant-
Cross Appellant
and
HARRIS
CANADA, INC.,
Counterclaimant.
NEWMAN,
Circuit Judge, concurring in part, dissenting in part.
I
In this post-Festo era it is no longer available, for an amended claim limitation, simply to apply the classical criteria of equivalency as if the Festo holdings did not exist. From the irregular and inconsistent application of the law in this opinion, I respectfully dissent.
The claims of the Ericsson patent were amended as to the limitation that is at issue for equivalency, thereby raising the Festo presumption of estoppel. The requisite procedure is now to determine whether that presumption has been rebutted with respect to the alleged equivalent. My colleagues on this panel state that the presumption did not arise (and therefore need not be rebutted) because the words "only supply power" were not amended. That is, the court holds that the Festo presumption of estoppel did not arise because these functional words remained unchanged, although the supply of power -- the limitation for which equivalency is alleged -- was restricted by amendment. The claim clause that states the conditions under which power is supplied to the telephone set when the receiver is on its cradle was amended for reasons of patentability, after the examiner persisted in rejections for anticipation and under section 112. Thus "effectively disconnects" was amended to "disables," and "actively connects" was amended to "enables."
1. . . . which, by the control signals effectively
disconnects disables the speech signals amplifiers and actively
connects enables the auxiliary amplifiers so that the speech signal
amplifiers, which require power, only supply power to the telephone set when
the receiver is off its cradle and a call can be made.
Amendment E. This is the clause for which application of the doctrine of equivalents is sought, for in the Harris device a small amount of power is supplied when the receiver is on its cradle. The amendment narrowed the conditions under which power is supplied to the telephone set, producing a rebuttable presumption of estoppel.
My colleagues state that the jury could have found that the Harris on-cradle power came from a source other than the amplifiers, for example, from transistors; if so, that could indeed be grounds for rebuttal of the Festo presumption, for example on the ground that the reason for the amendment was tangential to the alleged equivalent. Perhaps a court could alternatively find that the alleged equivalent was unforeseeable, thus rebutting the presumption on that ground. However, it can only mislead and confuse the public, to hold that no Festo presumption arises on the narrowing amendment. Tangentialness and unforeseeability are grounds of rebuttal established in Festo; they are not a mechanism for avoiding the presumption. The distinction now drawn does not add clarity to this jurisprudence or impart guidance to practitioners.
The district court granted JMOL of noninfringement, invoking prosecution history estoppel as barring the equivalency of the Harris provision of small amounts of power while the receiver is on the cradle. The district court observed that it was undisputed that the Harris amplifiers supply "some power" to the telephone set in the on-hook position. The district court held that Ericsson was estopped, by the amendment of "effectively disconnected" to "disabled," from now reaching the Harris devices through equivalency. The majority's holding that there is no estoppel or no presumption of estoppel because the three words "only supply power" were not amended, although the words concerning the supply of power were amended, produces a dramatic loophole in the Festo decisions.
This avoidance of the Festo presumption of estoppel is interesting, for had the claims in the Festo patent been so read, they too would have avoided the Festo presumption. The result in Festo would have been a simple reinstatement of the jury verdict, as is here done, on the unencumbered question of equivalency in fact. The court's departure today from its holding in Festo ignores our responsibility to apply that law to all cases pending at the time of the Festo decisions.[5]
This court's remand decision in Festo imposed interpretations with which I was not in full sympathy, as I stated at the time. See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 344 F.3d 1359 (Fed. Cir. 2003) (en banc) (Newman, J., dissenting) (criticizing the majority opinion for its application of the presumption of estoppel to claim limitations that were not amended). However, I am even less sympathetic to this inconsistency in the application of precedent. This court had been seeking a brighter line with respect to the doctrine of equivalents, and presumably found it in the Court's holding in Festo, 535 U.S. 722, 736 (2002) (a narrowing amendment made for reasons of patentability raises the rebuttable presumption of estoppel). It is our obligation now to apply this precedent with clarity and uniformity. I discern no support for the court's position that the Festo estoppel does not apply when there is a narrowing amendment to the clause whose equivalency is in dispute, if there are unamended words in the amended clause.
On the panel majority's holding that no estoppel arose, I would agree that a reasonable jury could have found the facts of equivalency under the classical Graver Tank function/way/result criteria. However, the approach required by precedent is to recognize the Festo presumption of estoppel, and remand to the district court to determine whether the presumption has been or can be rebutted on any of the grounds established in the Festo cases. Consistent guidance is required for stable law.
II
I concur in Part B of the court's decision, on the cross-appeal.
[1] We also note that the court’s reliance on Elekta Instruments S.A. v. O.U.R. Scientific International, Inc., 214 F.3d 1302 (Fed. Cir. 2000), was misplaced, as that decision did not even reach the question of infringement under the doctrine of equivalents. Id. at 1309 & n.2. Any discussion of the vitiation doctrine was, at most, dictum.
[2] On cross-examination, Ericsson’s expert witness did identify the QRA 23-25 transistors as part of the speech signal amplifiers. Nonetheless, we will not disregard his direct testimony as Harris would have us do; it was up to the jury to evaluate the credibility of his testimony.
[3] Because we conclude that the jury reasonably could have
found that the accused devices equivalently satisfy the “only supply power”
limitation even when used with caller-ID, we do not address Harris’s argument,
based on Innovad Inc. v. Microsoft Corp., 260 F.3d 1326 (Fed. Cir.
2001), that the accused devices do not infringe simply because they are capable
of literally operating in a manner described in the claims when they are used
without caller-ID.
[4] In any event, Harris has not argued for application of the Festo
presumption, even though the Supreme Court’s decision issued well before this
case was briefed to us, and has therefore waived any such argument. Nor has Harris asked for a remand on the
issue, as the dissent proposes we do.
[5] Although I remain of the belief that the Court did not intend its Festo decision to be imposed on previously vested patent rights, see Festo, 535 U.S. at 739 ("There is no justification for applying a new and more robust estoppel to those who relied on prior doctrine."), the Federal Circuit adopted such retrospective application. Festo, 344 F.3d at 1370 n.4.